Do you know someone who likes to make crafts, build furniture, or garden? Have you ever noticed how they’ll spend $50 for the materials to produce an item that would have cost $5 at the store?
And have you noticed that they can’t stop talking about and showing off their jagged scarves and rickety bookcases, and proudly bringing bags of misshapen vegetables to the office to share?
Why is everyone so attached to their overpriced, lopsided creations?
Because of the Ikea Effect, that’s why. And here’s how you can harness it to make more sales in your organization.
What Is the Ikea Effect?
The Ikea Effect is a cognitive bias originally identified by three researchers from Harvard Business School, Yale University, and Duke University.
It’s a little mental quirk that makes us fall in love with things that we made ourselves, or helped to make, often out of proportion to their logical value.
It’s named after a Swedish company that makes cheaply constructed furniture components and sells them in pieces, along with wordless cartoon instructions for assembly, packaged with a mixed bag of hardware including several wrong pieces and usually missing one critical component.
It’s an almost ludicrous business model, on which the company became a multi-billion-dollar global phenomenon.
It's easy to be puzzled by it, but it's partly explained by the Ikea Effect.
People love Ikea precisely BECAUSE Ikea makes them work for their furniture.
In the words of the original Ikea Effect researchers, “labor alone can be sufficient to induce greater liking for the fruits of one’s labor: even constructing a standardized bureau… can lead people to overvalue their (sometimes poorly constructed) creations.”
How Does the Ikea Effect Impact Sales?
As with other cognitive biases like the bandwagon effect and confirmation bias, the Ikea Effect impacts sales at every level of the organization, and it also impacts buyer behavior. Here are some examples.
Ikea Effect at the Buyer Level
Like other humans, buyers, in general, prefer products and solutions that they feel they helped to create.
This can be a problem for sellers in a few situations. For instance, perhaps the “competition” for their technology product is a self-built application that the buyer had a hand in creating. Even if the seller’s product would solve the buyer’s problems more effectively, they may have to fight the buyer’s perception that their own solution is better than it is.
The bigger problem at the buyer level, however, is that they may become attached to a competitor’s product if the competitor has encouraged them to participate in creating the solution.
The solution to this problem is both simple and difficult: Involve the buyer in co-creating your solution with you.
Inside Membrain, sellers can use DecisionLink to build value scenarios for the prospect. We encourage users to involve the buyer in the process of collecting information and designing the scenario, in order to “induce greater liking” for the results.
In this way, sellers can harness the Ikea Effect to their advantage… without necessarily shipping an unfinished product for the customer to clumsily assemble themselves.
The Ikea Effect at the Salesperson Level
You’ve probably seen the Ikea Effect on your sales team without realizing it. It shows up when salespeople resist training because they think the way they’ve been doing it (which they probably came up with on their own) is better. It shows up when they resist coaching because they don’t like being told what to do and they think they know better.
The good news is that it’s easy to harness the Ikea Effect to win better behavior and performance from your salespeople.
Work with salespeople to co-create their goals and plans, so that they feel ownership of them. Ask probing questions during coaching to lead them to the right conclusion, so that they feel they have reached it themselves.
And, of course, teach them to co-create solutions with buyers to win more deals.
The Ikea Effect at the Manager Level
One of the benefits of moving up inside an organization is getting to be a bigger part of designing and creating how your company works.
This is a huge boon to the Ikea Effect monster inside all our heads, but it can cause us some problems as we get promotions and hired into bigger roles. One of the problems that managers can exhibit is the tendency to want to change everything, whether it’s working well the old way or not. It’s the “need to have their fingerprints on everything” syndrome.
Another troubling impact of the Ikea Effect at the management level is when managers get overly attached to their way of doing things and try to insist that everyone in the department do it that way. They may also resist change when it’s sent down from “above.”
To harness the Ikea Effect at the management level, involve managers in strategic planning. Give them supportive structures, but within those structures, give them as much autonomy as is reasonable to hone their management style.
Create feedback loops, so that managers feel heard at the highest levels of the organization, and incorporate their useful feedback into strategy, process, and training.
The Ikea Effect at the Executive Level
For people who love to build things for themselves–and that’s all of us, it turns out–an executive position is a dream position. What could be better than having the authority to make big changes and impact the very structure of the organization you run?
Unfortunately, the Ikea Effect can have massively destructive effects on an organization if an executive lets their need to create run away from them. You see this when a new executive comes in and tears down everything to rebuild it in their own image, regardless of what was already working or not working.
You also see it when they become attached to an old way of doing things, a way that they themselves helped to develop, but that is no longer effective in a new marketplace.
I see it all the time in executives attachment to bad sales technologies that they’ve invested a lot in implementing in their organization (ahem, hello, Salesforce).
A self-aware executive can combat the Ikea Effect simply by being aware of it, and harness it to take ownership of making changes where they will be beneficial to the organization.
They can also use the Ikea Effect to win buy-in from stakeholders across the organization by listening to feedback, encouraging discussion, and soliciting ideas and solutions from parties at every level of the organization.
When everyone from frontline salespeople to high-level managers and executives feel like they’ve had a role in how the company functions, then everyone becomes invested in the success of the organization.
Membrain provides some pretty cool tools for helping salespeople, managers, and executives make the best use of the Ikea Effect. We’d love to show you how. Book a demo with us today.